By Emanuele Midilo

Whoever wins the election, a stamp duty hike for overseas purchases is due. Plus, how the UK compares with other countries on property taxes

Nothing is certain except death and taxes,” Benjamin Franklin, the US founding father, once said. Labour may be ahead in the polls but the outcome of the general election remains uncertain. One thing is for sure, though: foreign property buyers — including Americans fleeing their own election turmoil — will have to pay more tax regardless of who wins at the ballot here.

Labour leader Keir Starmer has given his team until next week to finalise the party’s draft manifesto and housing is expected to feature prominently, with a particular focus on measures to help first-time buyers while looking to impose more taxes on foreign investors.

To tackle Britain’s affordability crisis, which has made it difficult for the young to buy homes, the party plans to do two things: increase the stamp duty paid by foreign buyers of UK property; and restrict the sale of new-build properties to overseas investors. While the latter pledge is likely to be ineffective, the former could cause some ripples in the property market.

tarmer wants to stop foreigners from buying more than 50 per cent of properties in a new development. Yet foreign buyers account for significantly less than half of all homes purchased every year in London, the region most affected. Last year foreigners snapped up just 24 per cent of homes across Greater London, according to Hamptons.

In prime central London this rose to 45 per cent of all properties purchased — although the figure is still lower than Labour’s threshold and these areas would be too pricey for the average first-time buyer anyway. Aneisha Beveridge, Hamptons’ head of research, says it is “very rare” for the proportion of foreign buyers to exceed 50 per cent even in the most expensive developments.

But Labour’s plan to increase the percentage of stamp duty paid by foreign buyers — who currently pay an additional 2 per cent levy on top of the 3 per cent charged for second homes — is likely to be felt.

“It is time we built the homes our young people need,” Rachel Reeves, the shadow chancellor, told Labour’s conference in Liverpool in October. “We will raise the stamp duty surcharge on overseas buyers to get Britain building.” Although Labour has remained vague about how much the tax will increase, one to two percentage points has been mooted.

When it comes to foreign buyers, the top rate of stamp duty is already 17 per cent. Labour’s plans would bring it closer to 20 per cent, meaning a hike of between £15,000 to £30,000 for a £1.5 million property. “I don’t think Labour will end up doing it,” Camilla Dell, managing partner of the buying agency Black Brick, says.

Dell, who regularly deals with foreign buyers, thinks that a rise of one percentage point would be “tolerated”. She adds: “I don’t think [that] would be too harmful. Some people would think it’s too pricey but in the prime market people can meet the extra costs. It could slow the market, maybe, lead to some softening in prices. Some buyers would say, ‘I’ve got to pay an extra three percentage points, I want 3 per cent off [the asking price].’”

What would be “unacceptable”, Dell argues, would be the introduction of “draconian measures” like those in place in other countries, such as Canada, which has banned foreigners from buying properties until the end of this year. “[That] would kill the market.”

The levelling-up secretary Michael Gove has been lobbying the Treasury to impose a “foreign ownership levy” on second homes in Britain. He has reportedly pushed the chancellor Jeremy Hunt to apply the levy to all foreigners who own more than one home in the UK where it was not their principal residence.

It is unclear how such a levy would be implemented, with Treasury officials expressing reservations about the levy’s effectiveness and how much money it would raise. “It would have to be enough for it to bite,” a Treasury source says. “This is not primarily about raising money but stopping the situation where new flats are being bought up en masse by people who never intend to live in them.”

Whether it’s Labour or the Conservatives who end up rolling out their plans, property taxes in London are already significantly cheaper than international comparator cities, suggesting London will remain attractive to foreign buyers. So what do property taxes look like abroad?

Australia

In December the Australian government announced it will triple fees on purchases of existing homes by foreign buyers and introduce penalties for homes left empty of up to A$169,000 (£88,000). “Higher fees for the purchase of established homes, increased penalties for those that leave properties vacant and strengthened compliance activity will help ensure foreign investment in residential property is in our national interest,” the Australian treasurer Jim Chalmers said. The changes are expected to come into force later this year.

Canada

Foreigners are officially banned from buying properties in Canada, at least until the end of this year. Passed in 2022, the Prohibition on the Purchase of Residential Property by Non-Canadians Act does what it says on the tin: it prohibits non-Canadians from purchasing properties in the country. There are even hefty fines for estate agents “found guilty of knowingly assisting a non-Canadian in contravening the prohibition” and offending buyers may be forced to sell the property. Unofficially, however, there are a number of exemptions — such as for students, first-time buyers and properties under $500,000 (£292,000) — which according to some watered down the measures.

New Zealand

New Zealand was one of the first countries to introduce a “foreign buyers ban” in 2018, to curb the influx of cash-rich investors from Asia. There were workarounds, such as purchasing a commercial property, like a shop, and living above it. Last year, however, the National Party promised that if they won the general election they would allow foreigners to purchase homes worth more than NZ$2 million (£960,000). The National Party won the election in a landslide in October but the plans are yet to be implemented.

Singapore

Buying a property in Singapore as a foreigner was already tricky, as there are a number of restrictions in place. Last year, however, the island country doubled stamp duty tax on purchases by foreign buyers, from 30 per cent to 60 per cent. Foreign permanent residents will pay a tax of just 5 per cent — they will, however, be taxed at 30 per cent (up from 25 per cent) if they buy a second home. Companies and trusts must pay 65 per cent (up from 35 per cent) on purchases of residential property.

Hong Kong

Foreigners wanting to snap up a property in Hong Kong also face high taxes. The city recently imposed an extra 15 per cent “buyer’s stamp duty” on purchases of residential properties by foreigners — foreign buyers, including those from mainland China, already pay 15 per cent stamp duty when buying a home. Permanent residents, meanwhile, pay just 4.25 per cent.

Spain

Early last year the regional Socialist Party of Spain’s Balearic islands announced plans to introduce a foreign buyers ban. Local officials claimed that soaring prices in Mallorca, Menorca and Ibiza were driving local people out and creating “ghost villages” of empty properties. But in May the Socialists lost the election to the centre-right Partido Popular and the plans have been scrapped.

A staggering 71 per cent of buyers in prime central London chose to buy property using cash this year, according to research by the estate agency Savills.

Even outside London, cash buyers accounted for a record 46 per cent of all purchases in January 2023, according to the estate agency Hamptons.

Despite the Bank of England’s base rate of interest being held at 5.25 per cent in September — the first month the Bank has not raised the base rate since December 2021 — the higher-rate environment is deterring many buyers from taking out a loan, but those with the ability to purchase outright are still doing so.

At my property-buying agency, Black Brick, we have seen a similar trend. Last year around a third of our deals were cash. So far this year that number has risen to 57 per cent.

Being a cash buyer in this market is an advantage. It can help you to negotiate a lower price and win competitive bids.

Vendors often prefer a cash buyer over one that needs finance, as they will be able to transact faster and aren’t reliant on a bank’s valuation. But if you are relying on financing your next home, then how do you beat a cash buyer?

My first piece of advice is to be organised. Hire a credible solicitor, ideally one that is used to conveyancing in the area or development you are buying in. This gives comfort to the selling agent and vendor that the deal won’t be let down by a poorly performing lawyer.

Submit your offer in writing. Your offer letter should state the amount you are offering, who your lawyer is, who the lender is, the amount you are borrowing and your time frame for exchanging contracts and completion. Ask your bank or mortgage broker for a supporting letter to add weight to your offer.

If you are in competition on a property and up against a cash buyer, consider offering a bit more than the cash buyer if you can. Bear in mind there will be a bank valuation, so you don’t want to go overboard here, but this could help to swing things your way.

Be on good terms with the selling agent. They are more likely to recommend that their client accepts your offer if you can build a good rapport with them.

Hire a buying agent. This may sound like a sales pitch, but it’s certainly true that estate agents will often prefer our offers over offers coming from unrepresented buyers who they don’t know, even if those buyers are cash.

Estate agents know that we, like other buying agents, represent serious, committed and organised buyers who have also passed anti-money-laundering checks. An unrepresented buyer they have no relationship with is a higher risk option even if they are a cash buyer.

Be persistent. Even if you lose out to a cash buyer, keep track of the property until it exchanges contracts. As buying agents, we have lost out at times to other buyers willing to pay more for a property, only for the buyer to withdraw, allowing us to swiftly move back in and purchase the property at a lower price.

Remember that it’s not always about the pounds and pence. Money isn’t the only concern for sellers, particularly those who have lived in their home for many years. They may also be concerned about who the buyer is, and whether they are handing their home over to someone they believe will look after it going forward. Be human. Talk to the owner, tell them you love their home and why you want to buy it. It will make a huge difference.

The unpalatable truth for many sellers is that the price of their properties is simply too high

By Melissa York

Buyers are sitting on their hands waiting. Waiting to catch that mythical sweet spot between interest rates falling and property prices rising. And as they wait, sellers are left competing for a dwindling pool of potential buyers.

The Bank of England reported this week that in September mortgage approvals for house purchases were down 32.5 per cent compared to the same month last year and down almost 5 per cent on August — traditionally the quietest month.

HM Revenue & Customs reported on Tuesday that sales decreased by 17 per cent this September compared with a year ago. Sarah Coles, the head of personal finance at Hargreaves Lansdown, says: “The worst September in a decade reflects how tough the property market was in the summer, when mortgage rates were surging again. And despite a slight easing since, the gloom that settled over the market doesn’t seem to have shifted significantly.”

“It seems that it may well take more significant mortgage rate falls to clear the dark clouds that have settled over the property market, and at the moment we’re not expecting this until well into 2024,” she adds.

However, Rightmove reports that the average new seller asking price increased by 0.5 per cent (up by £1,950) in October to £368,231.

The stalemate between buyers and sellers means just 60 per cent of properties on the market sell, compared to 80 per cent at the height of the pandemic property boom.

Figures from the estate agency Hamptons show that in October 2021, the average home sat on the market for 28 days before being sold. In 2022, this increased to 45 days and this year, homes are taking 60 days to sell on average.

Sometimes, there is an obvious flaw standing in the way of a sale, such as subsidence or high ground rent, that could affect whether a buyer could get a mortgage.

However, the unpalatable truth for many sellers is that the most common reason a property isn’t selling is the price is too high. “The bottom line is [buyers] are finding a better house for the same money,” Edward Heaton, the founder of the property buying agency Heaton & Partners, says.

What impact will the vote have on buyers and sellers? And which party really is the homeowner’s friend?

By Melissa York

Who would you trust with the biggest investment you’ll ever make; the Labour party or the Conservatives? A year on from Liz Truss’s mini-budget, with mortgage interest rates of 6.5 per cent biting into incomes, it feels as though the connection between politics and the housing market has never been stronger.

The shadow of last September’s fiscal fiasco has been instrumental in cooling down 2021’s overheated property market. The average asking price is down 0.4 per cent over the year, Rightmove reports, the biggest drop since March 2019. More than a third of properties listed for sale on the property portal have been reduced in price, by £22,700 on average.

And there’s more upheaval on the way. The next UK general election must be held by January 2025. Pundits predict the prime minister Rishi Sunak will wait for inflation to settle before going to the polls in the autumn 2024.

YouGov polling suggests that over half of British adults think there will be a Labour victory, meaning a change of government is a real prospect.

One ill omen for the Conservatives is falling house prices. A report by the buying agency Middleton Advisors, compiled by the housing analyst Yolande Barnes, places 50 years of housing data in political context.

It found that falling house prices were a feature in two out of three regime changes since 1975, whereas there has been no change in the governing political party during a period of rising house prices since 1979.

Kate Eales, the head of regional residential agency at Strutt & Parker, says: “Over the last 40 years, the property market has become more political with each election. From right to buy to stamp duty reform and a mansion tax, buyers and sellers typically become more cautious around an election in anticipation of change and the uncertainty that may bring.”

Which party is the homeowner’s friend?

Real house price growth in the last five decades has risen the most under Labour governments, while four out of the five governments that presided over falling house prices were Conservative.

Middleton Advisors’ analysis also shows that the Labour prime minister Tony Blair oversaw the period of greatest growth in the housing market, with prices increasing by 9 per cent per year on average during his premiership. Between June 2001 and May 2005, when Blair was prime minister, house prices increased by almost £48 a day. Under John Major’s Conservative government, which started during a global recession in 1990, house prices increased by just £3 a day.

This may come as a surprise to market watchers as the Conservative party has traditionally styled itself as the “party of homeownership” in opposition to the Labour party, which is generally more in favour of taxing wealth and assets rather than income.

The property consultancy JLL dug into its data over the last ten years and found that most of the Blair price growth happened in the early days of New Labour when the economy was buoyant.

This period also coincided with the buy-to-let boom between 2000 and 2007, when UK Finance figures show that the number of buy-to-let mortgages obtained increased from 48,400 to 346,000.

So, is it the economy, stupid?

The numbers suggest that the Labour party may have been lucky enough to preside over more periods of economic prosperity than the Conservatives and it is this that has played a bigger role in boosting house prices than its policies.

However, policy undoubtedly influences economic conditions. Real house prices only declined by 5 per cent under Labour’s Gordon Brown, who presided over the worst of the global financial crisis between June 2007 and May 2010, according to Barnes’s report.

In comparison, real house prices have fallen almost 13 per cent during Rishi Sunak’s premiership, who has had to deal with difficult economic circumstances, namely high inflation following a global pandemic.

Introducing housing policies before an election is rarely enough to boost house prices. Government housing policy needs time to “bed in”, Lucian Cook, head of residential research at Savills estate agency, says “to give [politicians] the opportunity to campaign on the back of its track record”.

A good example of this is the introduction of help to buy in 2013, followed by the stamp duty reform in 2014, which allowed the Conservative party to put homeownership at the forefront of its 2015 election campaign.

Do elections move housing markets?

There is little evidence that elections themselves move housing markets (house prices) or affect the number of transactions (sales).

Cook says: “For a general election to have an impact on the housing market the outcome would need to raise the possibility of a material change in the macroeconomic backdrop, direct housing policy or property taxation. Often that isn’t the case, so there isn’t consistent evidence of a tangible election impact on the market.”

Estate agents usually report a market slowdown in the immediate run-up to an election though as buyers and sellers adopt a “wait and see” approach.

Edward Heaton, the buying agent, expects a slowdown of as much as six months before a general election and the most extreme example of this was in the run-up to the 2019 poll.

He says: “There was near panic in some quarters about the prospect of a [Jeremy] Corbyn-[led] government. I know of several people who relocated overseas out of fear of what impact it might have had on their wealth.”

The threat of a higher regulatory or tax regime can spook markets, as proposals for a mansion tax did in early 2010. But this only tends to affect the top end of the market, where buyers are most impacted by wealth taxes.

For the same reason, second-home sales tend to slow down too, Josephine Ashby, from John Bray Estates, says. When elections are held in May, she says the fear of change “tends to take the wind out of the usual spring market”.

The majority of the market, however, appears to be less buffeted by ballots. Across the four elections since 2010, there were just 1 per cent more sales in the three months following election month compared with the three months prior, JLL data shows.

How could the upcoming election change the housing market?

In the midst of a cost of living crisis, housing may be a bigger issue in the next election than it has been in recent years.

Each party will need to demonstrate that it has the ability to bring inflation under control, which has a direct impact on the finances of homeowners and landlords.

The manifestos will also need to have something to offer private renters “who have become more important to securing potential swing seats”, Cook says.

The delay of the second reading of the Renters Reform Bill, which has reportedly been held up by vested interests in the Conservative whip’s office, is not likely to endear the Conservatives to younger or less affluent voters.

However, it could win the Tories the landlord vote, as could ditching new energy efficiency requirements — as Sunak was reportedly considering this week — which are set to cost private landlords £9,260 per property on average.

Higher mortgage rates have priced out many first-time buyers without access to the Bank of Mum and Dad. While the Conservatives have introduced discount schemes such as First Homes and 95 per cent mortgage loan guarantees, these have not been enough to counter higher interest rates and they do not appear to have a successor to Help to Buy in the works.

● How mortgage valuations are driving down house prices

The Labour party has a homeownership target of 70 per cent (it currently stands at 64 per cent) and it is looking at a state-backed mortgage guarantee for people who can afford mortgage repayments but cannot save for a deposit.

Help to Buy has been accused of artificially pushing up new-build house prices and any demand-boosting policy is likely to be scrutinised for its ability to distort the housing market.

Marcus Dixon, director of residential research at JLL, says: “Overall the biggest spikes in activity have been around changes in tax rules (such as stamp duty land tax) rather than the result of an election.”

Property pundits seem satisfied by the assurances of the shadow chancellor Rachel Reeves, who recently ruled out wealth taxes on assets. However, there has been talk around raising council tax for second homes and creating a national register; giving first-time buyers priority to purchase new-builds; “ending the worst excesses and abuse of leasehold tenures”; and raising stamp duty for foreign property-buyers.

Perhaps the boldest policy is Labour’s pledge to scrap non-domiciled tax status, which allows people to live in the UK without paying tax on their global earnings. There are about 68,000 such individuals, mainly in London.

“If members of this small but economically significant group decided to vote with their feet and exit the UK, it could have a disproportionate impact on the very top end of the housing market,” Camilla Dell, the buying agent, says.

All of these policies are likely to affect the prime market and investors the most, rather than mainstream buyers and sellers, but critics say it could impact supply at a time when the housing shortage is acute.

This year, the Conservatives ditched their annual house-building target of 300,000 homes, but Labour plans to reinstate mandatory targets for local authorities.

Cook concludes: “While that is unlikely to significantly affect the market in the run up to the election, it probably has the greatest long-term implications for house price growth and activity levels, provided it results in concrete policies rather than arbitrary house building targets without any real plan of how to achieve them over a parliamentary term.”

Melissa York meets the people selling top properties to royals, A-listers, tech bros and politicians

By Melissa York

I work 25 hours a day, eight days a week and 366 days a year,” says Becky Fatemi, who buys houses for the super-rich with budgets from £5 million up to £200 million. She recently made an exception, buying a house for £4 million, “but that was for quite a high-profile actor”, she concedes.

At her elite London-based agency, Rokstone, her team of three sold only 12 houses last year, but collectively they were worth £500 million. To get her cut, Fatemi has to be available to her clients, who are from all over the world, at a time and a place that suits them.

“I have a membership to every private members’ club possible because they’re all in different worlds,” she says. “I meet clients at the gym and we’ll talk on the treadmill. I just flew to Monaco for two days, in and out. Last night I was at Sotheby’s for an art launch, then I went to an art gallery for a dinner with a client who’s just launched a champagne, and then next week I’m flying to Madrid to see a client’s flat there.”

Jet-setting and fine dining is all in a day’s work for Britain’s top-tier property agents, whether they are buying, selling or letting to actors, entrepreneurs or private equity fund managers — all of whom need an agent on the inside to find the few properties with the space, security and sparkle to house them.

This means that Fatemi also spends less glamorous hours in planning meetings with Kensington & Chelsea council asking for permission for a rooftop pool, or in lawyers’ offices getting deals over the line. She has to be very “measured” in what she promises her mega-wealthy clients; “these are very litigious people with big teams around them,” she says.

Their requirements are notoriously tricky to find among London’s historic housing. Fatemi’s latest impossible task is to find a one-bedroom property that spans 10,000 sq ft. “We’ll have to build it or restructure it, which is typical because everything they want is listed,” she says.

In this world, swimming pools, ballrooms and gated entrances aren’t at the top of buyers’ wish lists; wall space to hang art collections and vast temperature-controlled walk-in wardrobes are.

“Clients at this level are wearing couture, and it doesn’t even hang in the same way as normal clothing. You need a different place for the furs,” Fatemi says.

Iceberg basements were once a subterranean super-trend; the artist Damien Hirst converted his 150ft-long basement below his home in Regent’s Park, north London, to house his artworks, while Foxtons estate agency founder John Hunt won a ten-year planning battle to build a mega-basement in Kensington for his collection of classic cars.

But complaints from beleaguered neighbours and planning restrictions have brought this era to an end. Where basements are light and converted into useful rooms, such as staff quarters or gyms, they are still desirable, but Roarie Scarisbrick, partner at the prime buying agency Property Vision, has seen less appealing creations with niche appeal.

He says: “I got in a lift, pressed minus five and then my ears popped as I got to the centre of the earth. There was a revolving dancefloor and, on minus four, a walk-in gun safe.”

The “armageddon situation” for him, Scarisbrick says, is when he has two high-net-worth clients looking for the same type of property. Like a talent agent, he carefully curates his client list so they aren’t likely to be competing for the same houses. He learnt this lesson the hard way in his early days as a property agent when he had to mediate between two “alpha male types”.

He says: “We got to a certain point in the negotiation where there was probably £50,000 in it. And my client proposed it was settled in their Ferraris on a racetrack.

“I’m sorry to say that I was the fun sponge on that and I said, ‘This is absolute madness.’ Looking back on it, I really wish it had happened and I’d have been able to watch.”

It isn’t unusual for demanding high-net-worth clients to fall in love with a specific house that isn’t even on sale. Camilla Dell, founder of the high-end buying agency Black Brick, says she was struggling to find a house on the market in St John’s Wood with a garden and a carriage driveway for her client’s budget of £12 million, so she spent six months persuading a couple who did own such a house to sell.

She says: “That’s never an easy market to deal in because you’ve got very tricky sellers, lots of big characters, and this may be the first time they’ve sold in 45 years.”

Her biggest purchase last year was a £55 million house in Belgravia on behalf of a member of a foreign royal family.

She’s now on the hunt for a £3.5 million warehouse-style apartment for a young screenwriter in northwest London, and is also assisting Swiss buyers looking for a £15 million second home in Marylebone or Mayfair, and a Nigerian family with £50 million to spend on a house in South Kensington near their children’s school.

She also isn’t a fan of novelty basement conversions. “Who lives like that, really?” she says. “Even the really wealthy don’t have a hair salon [at home].”

Dell thrives on the competitive nature of her day job and claims to love taking her clients’ calls late on a Sunday evening. She recently gazumped another wealthy buyer on a big country estate in Surrey that had been under offer for 18 months.

“I told them, ‘We have to obliterate them out of the water on price,’ ” she says, and closed the deal for nearly £30 million on Christmas Eve. “Since buying it, we’ve actually had unsolicited bids from people coming forward at much higher levels.”

Not all of the elite want to buy, however. The A-lister Rihanna rented an eight-bedroom house in St John’s Wood, north London, for £18,000 a week, with parking for up to ten cars, a gym and two entire floors for entertaining. Taylor Swift reportedly rented a £7 million townhouse in Primrose Hill, north London, with her boyfriend, Joe Alwyn, before they split up a few months ago.

American celebrities are used to living in big houses with amenities such as swimming pools, massage rooms and separate quarters for a live-in housekeeper, explains Yasmin Ulhaq, who finds rich tenants for landlords at Glenfield Property Management. She says: “When people are coming over, they want to replicate that and they get a lot more value by renting.”

In February, Ulhaq found a house in Notting Hill for an American family for £27,000 a week. Last month, she organised a rental for £37,000 a week.

Apart from high-profile actors, the tenants she looks after include tech entrepreneurs, Indian investors looking for somewhere to stay while they expand their London property portfolio and politicians from overseas.

Privacy is a key consideration; they usually want a property that hasn’t been let on the open market and is only available on the books of exclusive agencies, so floorplans do not exist for anyone to peruse online. These tenants often come with their own security teams; the American family specified a CCTV monitoring room for their security guards.

Unlike a “normal” lettings agent, Ulhaq isn’t just calling in tradespeople and drawing up tenancy agreements; she’s pulling strings with promoters for tickets to the Grand Prix or Harry Styles concerts.

Once, she had to arrange to fly a chef to France in a private jet to buy a specific brand of salmon mousse for a tenant’s dinner party. “I had to send the chef who went to get it with colour swatches because it had to match the dusky pink shade the room was going to be decorated in,” she said.

While her job is all-consuming, there are perks; a tenant recently bought her a box at a Beyoncé concert to say thank you.

To unwind, Ulhaq will splurge on a shopping spree in Harrods, but uninterrupted days off are rare, she says. “Most days, if I’m lucky, I’ll treat myself to a tiramisu at the end of the day.”

Financial instability in their homeland is driving many towards the capital’s prime property market

By Melissa York

The wisteria-covered portico pillars of Belgravia are in full bloom, and the world’s wealthiest are on the hunt for a safe haven for their families — and their cash.

“We typically see Middle Eastern, Asian and US investors in London, however, this year one nationality is standing out as unusually active,” says Becky Fatemi, chief executive at the property buying agency Rokstone, “and that is buyers from Turkey.”

There have been thriving communities of Turks, Kurds and Cypriots in London for decades, congregating mainly around north and southeast London. However, in the past two to three years they have been joined by a growing number of Istanbul’s monied elite looking for a stable place in which to invest their wealth.

This week Recep Tayyip Erdogan, who has dominated Turkish politics for 20 years, narrowly beat Kemal Kilicdaroglu to be re-elected president, with 52.16 per cent of the vote. The country has been in economic turmoil since 2018, and this is believed to have led to Erdogan’s party, the AKP, losing Turkey’s biggest cities, including Istanbul and Ankara, in the 2019 local elections. There was a modest economic recovery during the pandemic, but the Turkish lira lost 44 per cent of its value against the dollar in 2021 after the Central Bank of Turkey cut interest rates from 19 per cent to 14 per cent.

Camilla Dell, founder of the buying agency Black Brick, says the currency crash means some Turks can only afford to rent in London at the moment, but the wealthier ones are keen to get their money out of the country. “Many Turks fear the longer Erdogan remains in power, the worse the country’s economy will become. They have lost all hope that he can turn it around. His handling of the earthquake disaster [in February] has only cemented this thought in the mind of many Turks, both locally and Turkish expats,” she says.

Turkey’s high-net-worth population is set to grow by 156.5 per cent by 2027, according to Knight Frank’s Wealth Report — faster than any other country’s elite.

Wealthy Turks like to rub shoulders in the prestigious neighbourhoods long favoured by buyers from the United Arab Emirates, southeast Asia and, until recently, Russia. Turkish entrepreneurs were behind some of the biggest property deals in Knightsbridge, Mayfair, South Kensington and Belgravia last year.

Hanzade Dogan Boyner, one of Turkey’s most high-profile tech bosses, who founded Hepsiburada, an online shopping platform dubbed “the Amazon of the East”, bought a six-bedroom Victorian mansion in Belgravia for £27 million last summer. In the winter there was a significant sale in Cadogan Square, Knightsbridge, to a Turkish buyer, who paid £27 million for a property that was originally listed for £35 million.

Rokstone has completed on several properties on behalf of Turkish buyers this year, including a £31 million house in Mayfair, a £7.5 million flat in Knightsbridge and a £4.5 million flat in Paddington. In the past few weeks Fatemi has found two properties for Turks, one in Knightsbridge and the other near Hyde Park. “Both wanted a house with a porter, good ceiling heights and good views,” she says. “The political uncertainty in Turkey seems to be the driving factor behind this heightened interest in London.”

Turkish buyers looking for a speedy purchase will pay cash for new-build flats by the River Thames, reports Lindsay Cuthill, founder of the prime property agency Blue Book. He says: “Buying momentum from Turkey, particularly in London’s prime postcodes, hits new heights when they have an election. Instability often encourages quick financial thinking.”

Institutional Turkish investors too are looking to the UK for solid returns. Will Watson at the Buying Solution, Knight Frank’s in-house buying agency, confirms that he has started working with a Turkish fund to find high-end family homes with potential for long-term capital growth.

At the end of September 2021 Eren Paper bought Shotton Paper Mill in Flintshire for £600 million — one of the largest investments made by a Turkish conglomerate in the UK. It plans to employ 660 people to make containerboard, a common packaging material.

Turkish buyers aren’t just looking to make a quick buck, however. Owning a holiday home in London is seen as evidence that one has “made it” in Turkey, according to Dell.

Education is a key driver for upwardly mobile Turkish families, according to Sophie Rogerson, managing director at the buying agency RFR, who says that she has a £15 million budget from one Turkish client to find a house near Francis Holland, a private girls’ school in Sloane Square, Chelsea, that charges fees of £7,750 a term.

Now that Erdogan has won another term, secondary residency is a “hot topic” among Rogerson’s client’s friends: one is considering moving her two children to the capital for the start of the school year, and a lawyer friend is looking for an investment property in central London.

“London is not the only option, of course. Greece, Portugal and Italy are also discussed at length,” Rogerson says. “However, with English so commonly spoken among Turks, the transition to life in London is felt to be more smooth. There is also a view that, with its vibrant cultural scene, ownership of a London property provides a certain social cachet that other destinations cannot compete with.”

By Melissa York

After all the recent political and financial turmoil, we take the temperature of the residential property market.

After two years of rocketing house prices, the property market is coming back down to earth. The average house price in the UK decreased for the first time in 15 months, dropping £4,000 from £272,259 to £268,282, in October, according to Nationwide. The estate agency Savills predicts prices will fall by 10 per cent on average next year, and the number of sales will reach its lowest level since 2011.

“There are more price reductions at the moment than new listings,” says Jonathan Hopper, chief executive of the buying agency Garrington. “I think the scale and the shock of what’s unfolded politically and economically over the last six weeks has driven the message home that this isn’t a changing market, it’s a changed market.”

With prices expected to fall further in the coming year, sellers will be keen to sell while buyers will want to wait — creating an impossible standoff. So should you wait or should you bid low and go? Here’s our guide to where you have room to negotiate and the markets where you’ll be laughed out of a viewing for trying.

Will price falls help me as a first-time buyer?
Property values increased by 13.6 per cent in the year to August, according to official statistics, which means that if house prices were to fall by 5 per cent, this would just take prices in London back to August 2021 levels. Meanwhile, prices in Wales would drop to March 2022 prices.

Higher mortgage rates are going to hit first-time buyers at the lower end of the market hardest, because these are the buyers who need to borrow the most and are most likely to be feeling squeezed by the rising cost of living. As a result there are 27 per cent fewer buyers for properties costing less than £250,000 than there were last year, according to Hamptons estate agency, and 14 per cent fewer homes going on sale due to the increased price of moving up the ladder.

Record-breaking rents, however, mean it’s worth buying if you can. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, a financial services company, says someone hoping to buy a £296,000 property may see the price drop £14,800 over the next year, but they would spend £13,944 renting the same property in that time. “When you bear in mind that all of this cash would go to a landlord rather than paying down the mortgage, it feels like less of a win,” she says.

Can I lower my offer after it has been accepted?
An offer isn’t legally binding until exchange of contracts in England and Wales. This is not the case in Scotland, where the accepted offer is legally binding, although buyers can make an offer subject to survey.

Fine & Country has this six-bedroom detached home in Shropshire for offers over £1 million, reduced from £1.2 million.

Once an offer has been accepted, the seller is legally bound to sell it to the buyer at that price. They do not have to accept a lower offer, they can simply quit the sale and put the property back on the market.

Gazundering, or lowering your offer just before exchange of contracts, is seen as bad form as it takes the seller back to square one and it can affect everyone in the property sales chain.

Long conveyancing times mean that some mortgage offers are expiring before exchange, forcing buyers to take on loans at higher interest rates than they had originally budgeted for. If this is the case, the seller may be sympathetic.

Where is there room for negotiation?
“It’s your boring, everyday, lower-price houses in a mundane town that are sticking around because those are where the buyers are having to tighten their belts,” says Carol Peett, managing director of buying agency West Wales Property Finders. “Any nice property is still selling incredibly quickly and smallholdings and properties with sea views are going way over asking.”

A four-bedroom detached house in Coventry, with 12 acres of paddocks and fields, is on the market for £1.4 million, reduced by £100,000, with Fine & Country.

The hardest properties to sell, where there may be more willingness on the side of the seller to negotiate, are below £100,000 (Hamptons figures show they are spending 21 days longer on the market) and properties between £250,000 to £500,000 (18 days longer).

The cost of living crisis is motivating a new breed of seller at both ends of the property spectrum who may be open to negotiation. Empty nesters who used to be happy underoccupying large properties but are finding them increasingly unaffordable to run, and mortgaged buy-to-let landlords in the South East, where yields are typically lower than in the North, who are unable to raise the rent enough to meet their rising mortgage repayments, according to the Surrey-based buying agent Richard Winter.

“There are discounts on uniform new-build-type properties that can only compete with each other on price. We’re seeing classic developer incentives — part-exchange, chain-break — creeping back in,” Hopper says. “Properties that require a lot of work are out of fashion too, because of the rising cost of construction and materials, and the reliance on cash to get around higher borrowing costs.”

How much can I bid below asking?
Almost 7 per cent of homes have had their asking prices cut by more than 5 per cent, according to the property portal Zoopla. Average discounts and prices are a blunt tool, however, and should be used as a rough guide. It all depends what you’re buying and where.

Fairview House in Berkshire is on the market for £2.25 million, recently reduced by £350,000 with Strutt & Parker.

So far this year, you were most likely to get an offer accepted under asking price on a sub-£100,000 (asking prices down 1.4 per cent on last year) first-time buyer purchase (down 1.4 per cent) in the countryside (1.3 per cent down), according to Hamptons.

Hopper says: “The big thing we’re seeing win negotiations is certainty. There is so much nervousness among sellers at the moment that being able to demonstrate that you are organised and you can hit deadlines is something that will give you room on price.”

“Four or five months ago, I had an offer accepted on a house at £1.75 million that went for over the asking price,” Winter says. “That fell through and went under offer four weeks ago at £1.65 million.”

An increasing number of properties are appearing on the property portals with asking price reductions as sellers face up to the harsh reality that the premiums seen during the pandemic, fuelled by the stamp-duty-holiday frenzy, are long gone.

This four-bedroom home in Trowbridge is on the market for £1.5 million, reduced from £1.65 million with Peter Greatorex.

Dominic Agace, chief executive of the estate agency Winkworth, says sellers need to be more “realistic . . . This doesn’t mean going backwards in prices, but instead not setting new records in the street.”

There will always be postcodes where demand outweighs supply. Hopper still sees four or five offers per property in the Cotswolds and Hampshire, but he is also seeing sellers that would traditionally wait for the spring putting their homes on the market now — or going off-market to test the waters — who are fearful of further rate rises in the new year.

Where are the best markets for buyers and sellers?
It’s best to be a seller right now at the lower end of the market in cities in the north and the Midlands, where value for money is better and house price-to-income ratios are lower.

More than a third (34 per cent) of properties in Britain attract three or more offers, Hamptons figures show, but the places where bidding wars are most common are in the North West (40.4 per cent), Scotland (39.3 per cent), the East Midlands (39.1 per cent) and Yorkshire (38.1 per cent). Buyer demand increased the most in the Old Trafford district of Manchester (48 per cent) and Liverpool city centre (30 per cent) between June and September, according to the data analyst PropCast.

Strutt & Parker have reduced this five-bedroom barn conversion in Sussex by £55,000. It’s on the market for £1.195 million.

It’s also a great time to be selling at the top end of the market, where buyers are largely insulated from mortgage rate rises because they don’t need a loan or they don’t need to sell. Properties worth £1 million or more are now selling 17 days faster than in October 2021, Hamptons reports.

In London, 5 per cent more homes are selling for above asking price than last year, and it was the region with the biggest rise in buyer demand, up 11.6 per cent on last year. PropCast data shows that the City of London and the West End are back.

With pandemic travel restrictions now a distant memory, international buyers have returned and are taking advantage of the slump in the pound. Camilla Dell, at the buying agency Black Brick, has recently done a number of deals in Notting Hill and Mayfair. “There’s a lot of international money swirling around. Most sellers are just really bullish at the moment in prime central London,” she says.

As for buyers, Savills predicts the biggest price falls in the next year will be in regions with the highest house prices where most of the market is reliant on credit. It’s for this reason that values are forecast to tumble 12.5 per cent in Greater London; 11 per cent in the east of England and the South East; and 10 per cent in the South West.

PropCast’s data shows that the biggest fall in buyer demand between June and September was in Totland Bay on the Isle of Wight (54 per cent drop), Deansgate in Manchester (40 per cent), Henley-in-Arden near Stratford-upon-Avon (37 per cent) and Amlwch on Anglesey (36 per cent).

Chris Druce, who produces the Prime Country House Index for the estate agency Knight Frank, says: “It’s getting back to a more classic market. Covid destroyed that seasonality, and I think this year we are returning to that quiet time during the winter and then it will ramp up again in spring when the houses start to look their best.”

How low will prices go?

Property prices are expected to continue falling as the cost of living crisis deepens with inflation and interest rates rising, but by how much, and how fast, is the subject of conjecture, writes Carol Lewis.

One of the most pessimistic forecasts has come from Simon French, chief economist at Panmure Gordon, an investment bank, who predicts that house prices will fall by 14 per cent over the next three years (or 29 per cent when accounting for inflation). Andrew Wishart, senior property economist at Capital Economics, a consultancy, expects prices to fall 9 per cent in 2023 and 3 per cent in 2024. Tom Bill, head of residential research at Knight Frank, believes they will fall by 5 per cent next year and 5 per cent the year after.

It’s not just prices that will fall though; transactions too will be hit. Lucian Cook, head of residential research at Savills, estimates that 190,000 fewer people will buy a home next year than this year. Hardest hit will be first-time buyers, with 110,000 fewer able to buy.

In prime central London, it’s open season for wealthy investors from abroad with dollars to burn.

By Emanuele Midolo

The property developer Nick Candy has always had a talent for attracting new wealth. In the early 2000s it was Russian oligarchs; in the 2010s, with the creation of One Hyde Park, he added sheikhs and Chinese businessmen. Now the husband of the former Neighbours actress and singer Holly Valance is trying to lure wealthy Americans.

“Because of the pound slump it’s a unique time to buy prime triple-A real estate assets,” Candy, 49, says. He adds that this is “a once-in-a-lifetime opportunity”, with the pound expected to strengthen against the US dollar over the next few months.

Candy is personally hoping to cash in on the slump in sterling — the most severe decline in the history of the currency. He is selling a three-bedroom flat in the Mayfair area of London for £8.75 million. Having finished refurbishing the property two weeks ago, he opted to put it on the market immediately. “The size of the apartment is perfect,” he says. “It was just a bit tired and run-down; it needed a new kitchen and new bathrooms — it needed to be ‘Candyfied’.”

Land Registry records show that he bought the duplex in November for £5.6 million. The vendor was Bernard Looney, the Irish-born chief executive of BP.

“We were considering letting it, but we’d prefer to sell,” Candy says, adding that it had already been viewed by potential buyers, mostly from the US, Canada and the UAE. “It’s Mayfair, it sits by the Connaught Hotel, it will always interest international buyers. I’ve been told that the building has got six FTSE 250 chief executives in it.”

“As soon as the pound crashed against the dollar we got inundated with calls,” says Guy Bradshaw, managing director of Sotheby’s International Realty. “Dollar buyers hold the trump card these days . . . When you are a cash buyer, not having to worry about interest rates and mortgage products being pulled off the market, you’ve got an ace in your hand.”

Bradshaw adds that many such buyers are shrewd businessmen. “They say that if they buy now, at the current exchange rate, they pretty much have a guaranteed exit strategy in three to five years’ time, once the [value of the pound] goes back up,” he says. “They’re going to make a lot of money.”

Marc Schneiderman, director of the Arlington Residential estate agency, sold a John Nash terraced house near Regent’s Park to an American businessman last month. It had been on the market for £15 million, but the buyer eventually managed to negotiate the price down to £13 million. Combining that discount with the currency fluctuation, he has saved about $5 million on what he would have paid in March, when he first viewed the property.

“These are people who have been looking for properties for a while, some since the beginning of the year,” Schneiderman says. “They’re now flying in determined to buy. The US buyers have been reacting quicker, jumping on a plane and coming here, but Middle Eastern investors are following suit.”

Owners of large properties in London are moving quickly too. Rosy Khalastchy, a director at Beauchamp Estates in the capital, says that she had a number of instructions with vendors hoping to lure foreign buyers. “We have had about half a dozen new listings,” she says, “and we have also had a flurry of clients asking us to inspect their homes and keep them in mind should a dollar-based buyer want a property in their area.”

Khalastchy adds that she knows of 11 dollar-based buyers looking to buy super-prime properties in central London, each with a budget of between £70 million and £100 million. “From these buyers alone, this is potentially £1.1 billion worth of London real estate being sought due to the market conditions,” she says.

According to Savills, price growth in central London paused in the past quarter, with the figure down by 0.2 per cent on the previous quarter. But properties in the city valued at £10 million or more continued to outperform, recording year-on-year growth of 4.3 per cent.

“Our client list looks a bit like it did in 2007 and 2008, before the great financial crisis,” says Camilla Dell, managing partner of the Black Brick buying agency. “[Other than the Americans], a lot of them work in the oil and gas industry, and a lot are from west Africa. I think that we will see a ‘flight to quality’ as we did in 2007. Buyers looking to diversify their wealth will be drawn to best-in-class assets.”